Asian Paints Ltd., India’s largest paint manufacturing company is expecting a bumper festive season this time and as a result, is targeting double-digit volume growth in the current financial year.
In a post-earnings interaction with CNBC-TV18, Asian Paints MD & CEO Amit Syngle said that he expects festive season sales to be robust this time around. “I think both from the point of view of we are looking at good kind of growth in quarter two and quarter three and in terms of the year, we maintain that the double digit volume growth should come in definitely,” he said.
A delayed festive season due to Adhik Maas, is generally considered better for paint companies, as the window to paint before festive season is longer.
Asian Paints’ domestic decorative business registered double-digit volume growth during the quarter. Sources tell CNBC-TV18 that the figure stands at 10.1 percent, compared to expectations of 10.2 percent.
The company reported revenue growth of 6.7 percent for the June quarter at Rs 9,182.3 crore. However, the figure was marginally below the CNBC-TV18 poll of Rs 9,335 crore.
Syngle mentioned that an increase in building activity is leading to a return of B2B sales.
The company’s EBITDA margin during the quarter stood at 23.1 percent, a 500 basis points expansion from the same quarter last year. Gross margin also expanded owing to a cool-off in raw material prices leading to lower input costs.
MD & CEO Syngle believes that the company will be increasing their ad spends over the next two quarters and hence they have maintained their margin targets lower for the time being. However, he further added that in case the raw material situation improves further, they will not hesitate in taking further price cuts.
“Given the fact that there are larger plans, and we see uncertainty with respect to a little bit of the macro environment to that extent, I think we are waiting and watching in terms of what is there before we want to really revise any of the guidance in terms of what we’ve given in terms of the margins,” Syngle said.
Asian Paints’ bath fittings business saw sales drop 28 percent during the quarter, while kitchen business sales fell by 12 percent year-on-year. Syngle said that the home decor business will pick up from the current quarter.
Syngle has, in previous interactions too, downplayed the challenge from the intensifying competition within the paints industry. “I don’t think that it is something which is going to shake the market in anyway,” Syngle had mentioned during the March quarter interaction with CNBC-TV18 when questioned about Pidilite’s foray into the segment.
This time around too, his views are no different. He said that the company does not look at competition as they have their own growth plans and targets.
Shares of Asian Paints are currently trading little changed at Rs 3,400.